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Up 22% in the past three months, ITV (LSE: ITV) is a share with the wind in its sails as we move into the final stretch of 2019. Never mind Brexit – in my opinion there’s plenty of scope for more gains as we move through the remainder of the year and into 2020, too.

You may recall ITV’s strong half-year update in which it recorded “better than expected total advertising revenue” in the period to June. Sure, ad sales were down by 5% in the period, but there was some hope that the gloom caused by the intense political and economic uncertainty for the domestic economy was lifting. And fresh figures on the state of the advertising market have added to the sense of optimism.

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According to the latest Advertising Association/WARC Expenditure Report released this week, aggregated advertising revenues on these shores rose a mighty 5.2% in the first half to clock in at £12bn. So strong was the half-time result that bodies warmed up their joint forecasts for the full year and a 5% year-on-year rise is now predicted, up from 4.6% previously.

And the good news doesn’t end here as, the British ad market is predicted to grow by 5.3% for 2020.

In demand

They say that bad news comes in threes, but for ITV that report contained a third reason to be happy instead. It showed that while online advertising drove those spending increases between January and June, it was the TV video on demand (or VOD) segment that enjoyed the strongest online growth, at 20%.

The broadcaster has thrown the kitchen sink at developing its ITV Hub on demand proposition in recent years. It can now be viewed on 28 platforms, had 29m registered viewers as of June (up 4m year on year), and saw the total number of hours that users spent watching via mobile device or television jump 13% in the first half. Those numbers provide plenty of reason for cheer.

Critically, from an advertising perspective, the hub is proving a hit with the core 18–34 age demographic thanks chiefly to hits like Love Island. ITV notes that around four-fifths of young Britons in this bracket are registered for the service, and the FTSE 100 firm has more tricks up its sleeve to engage these viewers (it plans to roll out its brand-new programmatic addressable advertising platform for ITV Hub in the fourth quarter).

The fightback begins

City analysts are predicting another earnings fall at the business in 2019, this time by 16%. But ignore this, I say, and consider ITV’s improving outlook for next year as ad markets improve and its globe-conquering ITV Studios division bounces back with a strong programme pipeline (revenues here dropped 6% in the first half).

The number crunchers expect the broadcaster to rebound with a mild 2% profits increase in 2020 though I can see this figure being upgraded given the surprising rate at which ad spend is improving in the UK.

And given that the company remains quite undervalued – it currently sports a price-to-earnings ratio of just 10.2 times for next year – there’s ample reason for it to make more serious share price gains. Throw a bulging 6% dividend yield for next year into the equation and I reckon ITV’s a top blue chip to buy today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.